Income Taxes

The Company’s effective tax rate for the six months ended July 3, 2015 and June 27, 2014 was 10.1% and 1.5%, respectively. The low effective tax rate on the Company’s pre-tax losses for the six months ended July 3, 2015 were primarily due to the following:


•	No tax benefits being available for the $22.8 million Venezuelan currency devaluation loss and foreign currency loss in Venezuela, and


•	No tax benefit being recognized on $53.0 million of operational losses incurred in jurisdictions where valuation allowances are recorded against net deferred tax assets.

These factors were partially offset by the following:


•	$6.5 million of tax benefits associated with the net release of uncertain tax position reserves,


•	$4.3 million of tax benefits associated with valuation allowance releases, and


•	$11.9 million of tax benefits associated with the recording of a deferred tax asset on the outside tax over book basis in the shares of Thailand businesses resulting from the pending sale of those businesses in the third quarter of 2015.

The low effective tax rate on the Company’s pre-tax losses for the six months ended June 27, 2014 were primarily due to the following:


•	No tax benefits being available for the $83.1 million Venezuelan currency devaluation loss,


•	A relatively small tax benefit of $13.9 million was recorded on $184.5 million pre-tax charges related to asset impairments, and


•	No tax benefit being recognized on $38.1 million of operational losses incurred in jurisdictions where valuation allowances are recorded against net deferred tax assets.

These factors were partially offset by the following:


•	$4.6 million of tax benefits associated with the net release of uncertain tax position reserves.

The Company’s effective tax rate for the three months ended July 3, 2015 and June 27, 2014 was 77.5% and (513.0)% respectively. The high effective tax rate for the three months ended July 3, 2015 was primarily due to $11.9 million of tax benefits associated with the recording of a deferred tax asset on the outside tax over book basis in the shares of the Thailand business resulting from the pending sale in the third quarter of 2015. This was partially offset by no tax benefit being recognized on $24.2 million of operational losses incurred in jurisdictions where valuation allowances are recorded against net deferred tax assets. The large negative effective tax rate for the three months ended June 27, 2014 was primarily due to no tax benefit being recognized on $10.1 million of asset impairments and $13.4 million of operational losses incurred in jurisdictions where valuation allowances are recorded against net deferred tax assets. The pre-tax loss was extremely low for both three month periods which also contributed to the volatile effective tax rates.

During the second quarter of 2015, the Company accrued approximately $1.0 million of income tax expense for uncertain tax positions likely to be taken in the current year and for interest and penalties on tax positions taken in prior periods, all of which would have a favorable impact on the effective tax rate, if recognized. In addition, $0.4 million of income tax benefits were recognized due to statute of limitation expirations associated with various uncertain tax positions.

The Company files income tax returns in numerous tax jurisdictions around the world. Due to uncertainties regarding the timing and outcome of various tax audits, appeals and settlements, it is difficult to reliably estimate the amount of unrecognized tax benefits that could change within the next twelve months. The Company believes it is reasonably possible that approximately $5 million of unrecognized tax benefits could change within the next twelve months due to the resolution of tax audits and statute of limitations expiration.

The Internal Revenue Service ("IRS") currently is in the process of examining the Company's 2012 consolidated income tax return. The IRS completed its examination of the Company's 2007 through 2010 consolidated income tax returns in the second quarter of 2013 with insignificant tax adjustments. With limited exceptions, tax years prior to 2010 are no longer open in major foreign, state, or local tax jurisdictions.